Credit Reference Agencies

The credit reference agencies are an important part of the process of getting credit. Although they do not intervene directly in lenders' decisions, the information they hold will influence whether you are able to get a loan or not. But what exactly is a credit reference agency?

A credit reference agency is like a huge data collection and storage network for financial and other information. There are three major credit reference agencies in the UK: Equifax, Experian and Callcredit. They all work in much the same way.

Credit reference agencies store information about your applications for credit. If you make an unsuccessful application, that is noted. If your application is successful, then the credit reference agencies keep a record of how you have handled your credit agreement. All of this information is stored in a credit file or credit report. Your credit file will include details of the credit cards you hold, the credit limit, and whether you have paid your bills on time. That information is also held for loans and other credit agreements, for up to six years.

In addition to information about credit agreements, the agencies also collect public information, such as the electoral roll information which lenders use to prove your address. Other public information includes any County Court Judgements against you, whether you have entered an individual voluntary arrangement, or if you have been made bankrupt.

Many people believe that lenders hold secret information about them, or that there is a blacklist preventing certain people from getting credit. This is not true. Anything that might prevent you from getting credit is likely to be in your credit file – and you have the right to see this whenever you want. For a statutory fee of £2 you can request a copy of your file from the main credit reference agencies.

It's a good idea to get a copy of your credit file from time to time. Mistakes do happen, and it's best to check that your credit file is accurate. If there are mistakes, and you can prove that they are mistakes, then you can ask to have them corrected. For example, if you paid a debt before a CCJ was incurred or before a repossession order went through, then this information should not be on the credit file. Each credit reference agency holds slightly different information, so it's worth getting a copy of each file so you can be sure that your credit reference file is accurate.